memo writing help, due in a few hours

Mako Rutherford

HBM 280

Hyatt vs. Marriott

There has been a high demand for extended stay hotels, and there has been an increasing amount of people staying at these types of hotels. There are approximately 40,000 extended stay hotels in the U.S. and the revenues continue to rise with the room revenue in 2016 being 11 billion dollars (Schaal, 2017). Extended stay hotels are different from any other hotels because the rooms come fully furnished and includes a kitchen so that people can feel at home. Residence Inn by Marriott and Hyatt House are two widely known extended stay hotels. Hyatt House is a high-end hotel and has many of the amenities that guests would want in an extended stay hotel.

An extended stay is considered guests who stays five nights or more. A survey shows that in the U.S., 34 percent of people stayed 5 to 10 days in a hotel and 36 percent stayed 30 to 180 days. It’s been shown that people have increased their stay in the hotel with short notice. Over 66 percent of people booked their room in only 30 days or less in advance. Large number of guests traveling for company relocation and company incentive travel have stayed in extended stay hotels. Leisure travels has also had an increase in bookings as well. These include home remodeling, moving, and medical/family related reasons. Many of these extended stay booking is in larger cities that include New York City, Orlando, Atlanta, Houston, and Denver. There is also new opening in other cities such as, Cincinnati, Kansas City, and Pittsburgh due to rising demand of extended stay travelers.

Residence Inn by Marriott and Hyatt House are both well-known extended stay hotels. To open a Residence Inn, the initial investment would depend on the size of the property you want. For a smaller 80 to 110 room property, the cost would range from 10.3 million to 22.5 million dollars. If you prefer a larger property with 120 to 150 room franchise, it will cost approximately 14.7 million to 28.7 million dollars. To open a new Residence Inn, it would require you to pay of 75,000 dollars or 500 dollars per suite. You also must pay a six percent monthly royalty fees on gross room sales. There is also a monthly program service fee of .05 percent of gross room sales and 90 to 108 dollars per room per year, including a flat rate of 6,000 to 7,200 dollars per year (“Residence Inn”). The Marriott has a large presence all over the world with 600 properties spread in 112 countries. They are one of the most successful lodging company due to its focus on innovation and loyalty programs. Their biggest weakness is that the excessive focus on operational norms have lowered workers morale. There has been in increase in global travel in which Marriott can use that opportunity to their advantage. Marriott’s biggest threat to their company are other competitors, such as Hilton and Hyatt.

Residence Inn offers free WIFI, full kitchen, workout rooms, private meeting rooms, and breakfast. Marriott also has better rates for those staying long term and the Marriott Bonvoy members offers many perks as well. If you are a member, you can receive up to five percent discount when you stay at any of the Marriott properties. They offer mobile check-in which makes it quick and efficient for guests and you can also earn free nights if you redeem points through their membership program (“Marriott Bonvoy”).

Hyatt House has an initial fee of up to 75,000 dollars and to open this franchise plus 500 dollars per room, it costs 13 million to 20 million dollars. It has a royalty fee of five percent (“Hyatt House Franchise”). Hyatt is known for having strong brand portfolio that can be used to their advantage when expanding their company. Even though they are a high-end hotel, they do not invest in technology and has not adapted to its present culture. The trends we see in consumer behavior will allow Hyatt to build revenue from different categories. Hyatt, however, has not developed innovative products like many of their competitors. This will cause a threat to the company. Both hotels are known for being high-end and provides an apartment feel because many guests stay long term. Hyatt House has a modern look to the rooms and is a select service, condominium style hotel. They offer free breakfasts, spacious rooms, full kitchens, WIFI, laundry, access to gym and pool. They also provide 50 dollars hotel credit if you stay 3 nights or more. Their membership program offers extended stay rates as well. The World of Hyatt offers up to 10 percent off when you stay at any of their locations and you can earn points towards free nights, dining, and spa services (“Extended Stay”).

Understanding the two different franchises, there are many similarities. But, if you were to develop the smaller, 80 to 110 suite property, it will be less expensive and still offer the same benefits as the Hyatt House. The application is cheaper as well because you can either pay 75,000 dollars or 500 dollars per suite, whichever is greater. Hyatt House application costs 75,000 dollars plus 500 dollars per room. For the smaller property with less rooms, the total costs would be less than Hyatt House. With Marriott’s membership program, it is more likely that someone will be a member due to their 7,000 plus properties. There is greater brand loyalty with Marriott. The extended stay hotel is very popular among business and leisure travelers and its popularity has increased over the years. Because of this, we should invest in an extended stay property to meet peoples demands. Investing in a Residence Inn would not only be less expensive, but it offers a wide variety of top-quality amenities to meet guests needs. With customers placing importance in larger brands and trust in brands, Residence Inn will provide that for those that are already loyal towards the Marriott company.

Reference

Extended Stay Hotels - Long-Term Travel: Hyatt House. (n.d.). Retrieved from https://www.hyatt.com/en-US/brands/hyatt-house.

Hospitality Net. (n.d.). [Infographic] American's On The Move - 35% of Extended Stay Travel Due to Relocation. Retrieved from https://www.hospitalitynet.org/news/4078607.html.

Hyatt House Franchise Review. (n.d.). Retrieved from https://www.franchisegrade.com/

franchises/hyatt-house.

Marriott International, Inc. (n.d.). Retrieved from https://www.marriott.com/online-hotel- booking.mi#global.

Residence Inn by Marriott. (n.d.). Retrieved from https://www.franchisehelp.com/

franchises/residence-by-marriott/.

Schaal, D., Hamdi, R., Whyte, P., Skift, & Singapore Airlines. (2017, April 26). How Extended Stay Hotels Are Pivoting Towards a New Generation of Travelers. Retrieved from https://skift.com/2017/04/19/how-extended-stay-hotels-are-pivoting-towards-a-new- generation-of-travelers/.

Page | 2